To establish an LLP, certain documents need to be prepared and submitted. These include:

• LLP Agreement: This agreement outlines the rights, responsibilities, and obligations of the partners and the internal workings of the LLP.
• DIN or DPIN: Directors or Partners must obtain a unique DIN (Director Identification Number) or DPIN (Designated Partner Identification Number) from the Ministry of Corporate Affairs (MCA).
• Digital Signature Certificate (DSC): Digital signatures are required for electronically signing various documents throughout the registration process.
• Identity and Address Proof: All partners must provide identity and address proofs such as PAN card, Aadhaar card, passport, or driver’s license.
• Address Proof of Registered Office: A document confirming the registered office address, such as a utility bill or rental agreement, must be submitted.

The process of forming an LLP involves the following steps:

• Obtaining DIN or DPIN: All partners must obtain a unique DIN or DPIN.
• Name Approval: Select a unique name for the LLP and apply for its approval with the Registrar of Companies (ROC).
• LLP Agreement: Draft and execute an LLP Agreement, which defines the mutual rights and responsibilities of the partners and specifies the terms of the partnership.
• Filing Incorporation Documents: Prepare and submit the necessary incorporation documents, including the LLP Agreement, to the ROC.
• Payment of Fees: Pay the prescribed fees along with the incorporation documents.
• Certificate of Incorporation: Once the ROC reviews and verifies the documents, a Certificate of Incorporation is issued, officially establishing the LLP.

To register an LLP, the following eligibility criteria must be met:

Minimum of two partners are required, and there is no upper limit on the maximum number of partners.

At least two partners must be individuals, and one of them must be a resident of India. There is no restriction on the citizenship or residency status of other partners.

• Limited Liability: Similar to a private limited company, LLP provides limited liability protection to its partners. Their personal assets are protected, and they are not personally liable for the debts and liabilities of the LLP.
• Flexibility and Ease of Management: LLPs offer flexibility in terms of management and decision-making. Partners have the freedom to define the internal structure, roles, and responsibilities as per their agreement. They can manage the LLP directly, reducing the need for a complex hierarchical structure.
• Separate Legal Entity: LLP is a separate legal entity, distinct from its partners. It can enter into contracts, own property, and sue or be sued in its own name. This provides credibility and enhances the ability to enter into business transactions.
• Taxation Benefits: LLPs enjoy certain tax benefits. The LLP itself is not liable to pay tax; instead, the partners are individually taxed on their respective share of profits. This avoids the issue of double taxation that is often associated with companies.
• Easy Formation and Fewer Compliance Requirements: LLPs have simpler and more cost-effective formation procedures compared to companies. They have fewer compliance requirements, such as no requirement for the appointment of auditors or holding annual general meetings.

• Unlimited Liability for Negligence: While LLPs offer limited liability protection in most cases, partners can be held personally liable for their own negligence or misconduct. They are still responsible for their actions and may be liable for any losses arising from their negligence.
• Restricted Fundraising Options: LLPs have limited options for raising capital compared to companies. They cannot issue shares or raise funds from the general public. They primarily rely on partner contributions and borrowing from financial institutions.
• Compliance Obligations: Although LLPs have fewer compliance requirements than companies, they still need to fulfill certain obligations. This includes filing annual statements with the Registrar of Companies (ROC), maintaining proper accounting records, and adhering to tax and regulatory requirements.
• Lack of Perpetual Existence: LLPs are not considered perpetual entities. In case of the death, retirement, or insolvency of a partner, the LLP may need to be reconstituted or dissolved unless otherwise specified in the LLP agreement.
• Perception and Credibility: Compared to private limited companies, LLPs may face challenges in terms of credibility and perception, especially when dealing with certain business partners, government entities, or financial institutions. Some stakeholders may prefer the corporate structure of a company over an LLP.